Friday, April 04, 2008

Mass poverty has its roots in developing-nation farms

You'd think that when a farm's productivity soars, so would the farmer's income.

Yet, while that's often the case in a rich society like ours, it usually isn't in a poor one.

There, as long as farmers produce the same old local staples -- things like rice, maize, millet or cassava, which rarely trade internationally -- it doesn't matter much how many more mouths they feed. As yields go up, prices go down, and the farmers are no better off. It's only if or when they get into export crops that their incomes increase.So, while Asia's Green Revolution freed up huge numbers of workers to move to the city and power its modern-day Industrial Revolution, the resulting new wealth is most unevenly distributed. And many, many farm families remain mired in poverty.

Indeed, three-quarters of the world's poorest people are those who stayed on the farm. They make up at least two-thirds of the workforce in the least-developed countries -- those, mainly in subSaharan Africa, that missed the globalization wave.

In places that are making better progress against poverty, the number ranges from a quarter of the population earning a twelfth of the wealth in much of Eastern Europe and Latin America to nearly half making a fifth of GDP in most parts of developing Asia.

The least-developed urgently need policies and programs to foster international trade, the springboard for the astonishing economic growth and dramatic poverty alleviation in countries like China, India, Malaysia, Vietnam and many, many more.

This includes an end to agricultural protectionism, the perennial hold-out in every trade-liberalization scheme, and favoured access to international markets for the countries that are so far missing the globalization boat.

A number of high-level optimists in places from Brussels to Brazil are actually voicing optimism about prospects for success in the recently rejuvenated, seven-year-old Doha Round of world trade talks.

I hope they're right. Success is long overdue, and a fair and open trade regime can be as important to developed countries -- especially Canada, which is far too dependent on trade with a single partner -- as to developing ones.

But the Doha Round, like the Uruguay Round and others before it, is conducted as a negotiation, a structure that ill-suits truly poor countries.

It's true that a lot of poor countries -- and some not-so-poor -- shoot themselves in the foot with fierce protectionism that hurts mainly themselves.

Such practices foster bad governance and corruption, maintain artificially high prices, smother export opportunities and choke out new businesses that could stand on their own. It's tempting to argue that developed countries should use the promise of trade concessions to persuade these countries to clean up their acts.

But the developed countries, despite their lip service to free trade, are rampant protectionists in their own right. Their subsidies and quotas and tariffs -- especially, but not exclusively, in agriculture -- add up to hundreds and hundreds of billions of dollars a year. So any negotiation over who should give up what is anything but a fair fight.

Big resource-rich countries like Brazil or Indonesia might have a bit of clout at the bargaining table, especially if they act together.

But what chance is there for countries like Burkina Faso, Laos or Haiti to offer the big guys enough to win meaningful concessions in return? What can they put on the table that other countries will actually care about?

Paul Collier, the Oxford economist who thoughtfully analysed the causes of and solutions to mass poverty in a new book called The Bottom Billion, argues that the developed countries should simply grant concessions to the poorest ones. Never mind demanding anything in return.

I think he's right. Giving desperately poor countries unfettered access to rich markets, especially for farm products, would do vastly more to combat mass poverty than any amount of aid the rich world could ever marshal.

Failing to deal with mass poverty and the failing states that foster it will impose a far, far greater cost on the rich world's prosperity and security.